Pittsburgh Post Gazette: "Who watches the store for public pensions?"

In an article from Saturday's paper, the Post-Gazette uses some recent high profile scandals, such as Ohio's Coingate, as a jumping off point to examine the accountability of those who make investment decisions for public pension plans.

It isn't as though public pension funds don't have oversight: Most have boards of trustees, formal investment policies -- sometimes set by statute -- and, often, committees to either directly approve asset purchases or hire money managers to do so on pre-agreed terms.

But public funds are not subject to the same federal scrutiny as private pensions, the majority of which are protected by a federal insurance plan. And sometimes the investments they make or the money managers they hire vault into headlines when political favoritism is suspected -- or found.

Those who work closely with public funds contend cronyism is the exception, not the rule. They also argue that the tiny bets on oddball investments that some public funds make often are placed for the same reasons -- and to the same effect -- as risky investments made by private interests: enhancing overall returns.

"I find the people we deal with take their fiduciary responsibility very seriously," said Fred Nesbitt, director of the National Conference on Public Employee Retirement Systems, a nonprofit advocate for public pension plans. "There are some isolated cases of people not using common sense, or getting greedy."

Robert Strauss, a public policy and economics professor at Carnegie Mellon University, was more skeptical. He said that cases of "self-dealing" -- in which public pension trustees or their associates benefit from a fund's activities -- are not uncommon.

Read the whole article.